Republicans: Let's Privatize Medicare!
One of the fun little tidbits in the Republican Budget roll out today is here:
The substitute gradually converts the current Medicare program into one in which Medicare beneficiaries choose the most affordable coverage that best suits their individual needs. For individuals 55 or older, Medicare will not be changed (other than income-relating the prescription drug benefit): the budget preserves the existing program for these beneficiaries. To make the program sustainable and dependable, those 54 and younger will enroll in a new Medicare Program with health coverage similar to what is now available to Members of Congress and Federal employees.
This is an idea that's been kicking around in conservative circles for some time, and it's an expensive one. Well, it's expensive unless you're an insurance company, in which case it's extremely lucrative. The goal is to phase out Medicare over time by providing new seniors with the health insurance options available under the Federal Employees Health Benefits Program. The FEHBP provides relatively high quality care, and most working-aged people would probably prefer its options over the ones provided by their employers. But Medicare provides similar quality of care while containing the costs of administration, and those costs are much higher at private insurance companies.
There's more like this in the GOP's budget report. And, if you're interested in legislative language for some reason, the resolution itself is here.
Josh
Matt
Eric
I don't get it.
Wouldn't we want everyone to have access to health care similar to what is available to members of Congress?
April 1, 2009 1:57 PM | Reply | Permalink
Oh, but the Republican members are going to volunteer to give that up in order to show how serious they are about deficit reduction. Right? Anyone? Bueller?
April 1, 2009 2:02 PM | Reply | Permalink
The key here, I think, is the language that says everyone can choose the coverage that is most AFFORDABLE and best suited to them. In other words, it isn't free like Medicare, you have to pay for it. The Republicans thus get a twofer - they get rid of an entitlement and give some more profitable business to their insurance industry buddies. And costs go up -- remember Medicare administrative costs are under 2%; private insurers suck up 20-25% for their profits.
April 1, 2009 2:35 PM | Reply | Permalink
That's a page straight out of The Shock Doctrine! Corporations buy up the public asset for pennies on the dollar. Then they cut staffing to bare bones while raising prices for services - maximize the profit equity. Of course the basic plan will be relatively inexpensive just to get people in the door, however, if you need special treatments above and beyond some iodine and a band-aid, that'll cost you far more than the basic coverage. So while the public would have the option to get the best medical care, most won't because they won't be able to afford the premiums - we're back at square one and nothing got accomplished.
April 1, 2009 3:09 PM | Reply | Permalink
"most won't because they won't be able to afford the premiums - we're back at square one and nothing got accomplished."
Repugs would never have a plan for health care in this country. forget it..
April 1, 2009 5:46 PM | Reply | Permalink
No we do not want to have "access" to health care similar to what is available to members of Congress! We want everyone to be covered by health care similar to what is available to members of Congress and paid for as are the medical services of Great Britain and other European nations. We do not want insurance companies involved sucking off their blood money! The money currently being withheld from paychecks for Medicare, supplemented by a graduated wealth tax would pay for the health care.
April 1, 2009 3:08 PM | Reply | Permalink
Europe pays for their universal heath coverage thru payroll taxes. The US should consider taxing both individuals and employers similar to social security to keep it solvent.
April 1, 2009 3:13 PM | Reply | Permalink
WORD!
April 1, 2009 3:34 PM | Reply | Permalink
From the Party of No
to
the Party of WTF
April 1, 2009 2:00 PM | Reply | Permalink
I hate to say it but I believe this may be the way Obama is planning on going too. He wants to also fix Medicare. Eventually those of us 55 and older will die off and they'll be able to kill Medicare as we know it today. Seniors will instead be doing what they are currently doing with drug benefit plans. paying their share of the bill.
What happens to that money that is taken out of their paychecks is another story.
April 1, 2009 2:01 PM | Reply | Permalink
You're probably right.
I own a pharmacy and I have seen first hand how Medicare Part D (Prescription Drug Plan) works.
Basically, a Medicare recipient is offered the ability to PAY an admittedly LOW MONTHLY PREMIUM for some Prescription Drug Coverage.
There are well over 100 different plans from which to choose and it's not easy (especially for the elderly) to go through and figure out which plan is best for them.
The plans are administered by Private Insurance Companies!!! They collect the monthly premiums from the patients... AND!!! They get "Subsidized" by the Federal Gov't (i.e. OUR Tax Dollars) on the back side.
It was a big PAY DAY for Insurance Companies.
...
From what I can tell, Obama's plan (and most others) is going to be something like this.
I think Medicare Part D was a "Test Balloon" of sorts...
But, I can see many different Private (for profit) Insurance Companies offering many different plans... and we have to choose what's best for us...
AND we will be Required By Law to either:
1) Buy our own private insurance policy.
OR
B) Buy into one of these "Subsidized" plans... So we get to pay a premium up front... and we get to pay taxes which will subsidize the insurance companies on the back.
i.e. PAY DAY for insurance companies!!!! You better believe it.
April 1, 2009 5:19 PM | Reply | Permalink
Thanks for this insider's view.
April 1, 2009 6:08 PM | Reply | Permalink
I'm surprised they didn't offer to fund it with bonds backed by the DOW or something.
Honestly though, Obama suggested using the plan similar to Congress early on during the campaign.
You can find it here in a Q/A PDF on his web site.
April 1, 2009 2:01 PM | Reply | Permalink
How is this abolition of Medicare??
Josh and other TPMers - what drugs are you on???
April 1, 2009 2:03 PM | Reply | Permalink
Like I said earlier, eventually, those 55 and older will DIE off and the PLANS that seniors buy into will be simply like the Drug plans they buy into today -- no more "Medicare" as we know of it today. It's called privatizing medicare/drugs. Eventually somebody will get the nuggets to do the same with social security -- only now is bad time because of stock market sickness.
April 1, 2009 2:13 PM | Reply | Permalink
Here's what their budget says:
"...those 54 and younger will enroll in a new
Medicare Program with health coverage similar to what is now available to Members of Congress
and Federal employees; and they will receive a premium support payment equal to 100 percent of
the Medicare benefit"
April 1, 2009 2:30 PM | Reply | Permalink
Awwww but I'm betting it will be mandated, meaning everybody at that age pays into it - which in the long run ends up saving it....for awhile anyway.
Currently you don't go on Medicare until you are 65 or disabled. They are gaining millions of new, shall we say, customers?
April 1, 2009 2:34 PM | Reply | Permalink
"...The proposal retains the Medicare payroll tax of 2.9 percent of the Federal Insurance
Contributions Act [FICA] and Self-Employed Contributions Act [SECA] payroll tax, as is the
case now....."
Also from their budget.
April 1, 2009 2:39 PM | Reply | Permalink
So they're going to force people into a more expensive (for the same care) plan but give them a premium support payment equal to the lower Medicare costs. So if the cost for Medicare is $1000/mo and the cost of the private plan is $1200/mo, you have to come up with the extra $200 out of your own pocket. For the same coverage. And where does the extra $200 go? I'll give you three guesses.
April 1, 2009 2:43 PM | Reply | Permalink
Ummm,
1. Insurance industry and pharma.
2. That funnels it to the rnc for campaigns or "retirement" plans.
3. The remaining "retirement" funds go to the king and darth vader.
I think that's where that 200 goes, for the benefit of the good ol gop.
April 1, 2009 2:46 PM | Reply | Permalink
"The reform targets support for those who truly need additional help. The premium support
payment is risk-adjusted, so it increases with age and health status. It is income-related, so lowincome seniors receive extra support to cover out-of-pocket costs, and high-income seniors (those with household incomes exceeding the Presidentโs benchmark level of $170,000) receive support relative to their annual incomes. Under the new program, premiums continue to be based on an average for all beneficiaries. As a result, phasing the younger population into the new program will not increase premiums for those who remain in the existing program."
April 1, 2009 2:51 PM | Reply | Permalink
Private insurance costs more than Medicare, due to much higher administrative costs. Invariably. That extra cost has to paid by someone. There are two choices:
1. You
2. The government
Any bets on which it's going to be?
April 1, 2009 3:56 PM | Reply | Permalink
My best is that it's going to be "You" in either of these options - unless the Government has a secret source of funding from aliens.
April 1, 2009 4:18 PM | Reply | Permalink
Exactly. So we pay more for the same (or in the long run, probably less) benefits, so that private insurance companies can make more profit. If this isn't a typical Republican program, I don't know what is.
April 1, 2009 4:21 PM | Reply | Permalink
"The Republican budget expands protections for seniors against catastrophic medical costs.... These enhancements are coupled with a readjustment of cost-sharing for high-income beneficiaries only,
and a greater State role in targeting hospital funds. Specifically, the budget endorses the
administrationโs proposal of income-relating the Medicare Part D (prescription drug) benefit (this
is for the prescription drug benefit only... To ensure the cost of frivolous litigation is not passed on to consumers in the form of higher health care premiums, the substitute caps non-economic damages in medical malpractice lawsuits..."
Explain please?
April 1, 2009 4:36 PM | Reply | Permalink
Translation: blah, blah, blah, blah.
Let's cut through the bullshit. Private insurance ALWAYS costs more because of the much higher administrative costs. ALWAYS. So privatization will result in higher costs for the same benefits.
What's not to like?
They can spin it any way they like and obscure it with big stinking piles of rationalization, but nothing can change this basic fact. It's a typical Republican plan: more for the drug and insurance companies, less for everyone else.
April 1, 2009 4:54 PM | Reply | Permalink
What am I missing? Why would phasing in a younger population be thought to risk increase premiums in the first place? Doesn't that kind of risk increase with age? Bringing in a younger population should decrease risk (and risk-based premiums) if it does anything at all.
April 1, 2009 4:32 PM | Reply | Permalink
Oh, never mind, I see it. It's not supposed to increase premiums for those remaining in the OLD program when younger people move to the NEW one.
But in that case, the reasoning Lalo is quoting makes even less sense. How does the method of calculating premiums in the new program do anything to guarantee that premiums in the old one won't go up when they move the younger ones to the privatized program???
April 1, 2009 5:58 PM | Reply | Permalink
Mind ya, I never said I was FOR this.
April 1, 2009 2:14 PM | Reply | Permalink
That trick never works...Nothing up my sleeve...
April 1, 2009 2:30 PM | Reply | Permalink
After watching Frontline last night I'm convinced, more than ever, that health insurance companies are filled with almost as many heinous people as Wall Street.
April 1, 2009 2:32 PM | Reply | Permalink
They're worse. Wall Street is only stealing your money. Insurance companies are stealing your life.
April 1, 2009 3:14 PM | Reply | Permalink
The word that bests describes the work being performed on Wall Street and in the Health Insurance industry is incest.
April 1, 2009 3:19 PM | Reply | Permalink
The transition from fixed payment to fixed contribution retirement benefits (replacing pensions with 401k's) added huge numbers of ill prepared middle class workers to the ranks of investors. This fueled the stock market growth of the last 15 years and these middle class investors are largely the ones burned by the dot com crash and the current financial collapse.
But when you start sucking money out of health care into corporate coffers you are disproportionately hurting the poor. The middle class gets less medical care and pays more for it but the poor will largely go without.
When wall street gets greedy and trashes things, people lose money and standards of living decline. When the health care industries get greedy and trash things people die.
I can't speak to relative levels of evil people but I would consider the misbehavior of the health care companies to be far worse than those of wall street.
April 1, 2009 3:29 PM | Reply | Permalink
You've got your terminology the wrong way around (and a little garbled).
The kind of pension plan you mean is defined benefit -- the employee is guaranteed a fixed amount of benefit at retirement, and the employer must adjust its contributions to the plan's fund to meet that guaranteed target. The employer thus assumes the market risk. If the market returns drop below expectations, the employer must contribute more to make up for it.
Increasingly, defined benefit pension plans have been replaced with defined contribution plans, where the employer contributes a specified amount/percentage of payroll to the retirement fund, and what the employee gets out of it at retirement depends on how well the invested funds have performed. Employee assumes the market risk.
A 401(k) is basically a defined contribution plan: the employer's contribution is a fixed amount (or percentage) defined by the terms of the particular plan, and there is no guaranteed benefit amount when the employee retires; it's dependent on the investment returns. Again, the market risk is assumed by the employee.
April 1, 2009 4:42 PM | Reply | Permalink
Lots of confused comments out there, so let's clear this up.
1. Lalo35adm: "How is this abolition of Medicare??"
This - the Republican plan to replace Medicare with Congress's plan - is the "privatization" of medicare, which is presently run entirely by the government, and thus enjoys lower overhead costs (6% as opposed to 30% for private plans). The Congressional health-care plan is a private plan, but one provided by the Congress-critters' employer, the government. In effect, Congress buys into a private plan for its employees, just as do many businesses. Not surprisingly, Congress provides a better private plan than do most employers, but it is still private, has higher overhead costs (due to the need for marketing and profits), and thus is costlier than Medicare and involves greater patient premiums, co-pays, and deductibles.
2. Coonsey: "I hate to say it but I believe this may be the way Obama is planning on going too. He wants to also fix Medicare.":
You seem to be conflating two things:
1. Obama's plan to allow ordinary citizens to buy into the Congressional private plan, part of his health care reform proposal;
2. Obama's plan to reform Medicare, which primarily means lifting the limit on salary that must pay into Medicare and Social Security. Right now, people contribute 7.75% of their salary to Medicare/Social Security, but only up to a limit of a $90,000 salary. Thus, a person making a salary of $90,000 and a person making a salary of $1,000,000 both pay 7.75% of $90,000 into Medicare/Social Security. Obama wants to raise this ceiling on contributions to get more money from rich people. He said nothing about replacing government-run Medicare with the private, employer-provided Congressional plan.
April 1, 2009 2:36 PM | Reply | Permalink
"Not surprisingly, Congress provides a better private plan than do most employers, but it is still private, has higher overhead costs (due to the need for marketing and profits), and thus is costlier than Medicare and involves greater patient premiums, co-pays, and deductibles"
So..... we're knowingly going to say NO to an admittedly better quality plan because of costs.
That makes no sense. Especially coming from a party that's wasting an equivalent of our GDP on stimulus and bailouts.
April 1, 2009 2:43 PM | Reply | Permalink
It is better than the plans of most private employers. It is not better than Medicare, which is PUBLIC and government run.
April 1, 2009 2:49 PM | Reply | Permalink
So, medicare is better BECAUSE it's public and government run?
April 1, 2009 2:53 PM | Reply | Permalink
No, it's better because the end result is better. The medical care is what you would get anywhere, but it doesn't cost you as much as a private plan would.
April 1, 2009 3:44 PM | Reply | Permalink
Well then I'm not surprised that the Congress is tripping all over each other to participate in "the better end result".
Sounds a bit like the good public schools in DC that Obama sent his daughters to.
April 1, 2009 4:21 PM | Reply | Permalink
No - more like the good public schools in Montgomery County Maryland that are well funded.
April 1, 2009 9:57 PM | Reply | Permalink
Lalo..once again you return to troll and stir the pot..for a guy who claims to be so smart..you don't shit about health care reform. If you knew anything of value on this topic you would know that single payer is the only way to go for universdal care and reduction of costs!
April 1, 2009 3:01 PM | Reply | Permalink
You can always just keep talking to youself.
Oh, and I haven't touched your pot. You can keep it.
April 1, 2009 3:10 PM | Reply | Permalink
At least he's not pretending to be an embittered Democrat anymore.
April 1, 2009 4:24 PM | Reply | Permalink
No, not quite. I handled our payroll programming for a number of years, until the company outsourced payroll to ADP. There have been completely separate portions of the FICA tax for Medicare and Social Security for years now: separate percentages, separate maximum amounts.
In 2008, the maximum wage base for the Social Security portion was $102,000 (increased to $106,500 for 2009), and the tax is 6.2% of wages/salary up to that maxium wage base from the employee and a matching amount from the employer.
There has been no maximum wage base for the Medicare portion for some time; the tax rate is 1.45% of wages/salary from the employee, and a matching amount from the employer.
April 1, 2009 5:52 PM | Reply | Permalink
If anyone says privatize to me again, I'll break their collar bone.
C
April 1, 2009 2:39 PM | Reply | Permalink
This is a confusing post. Is the blockquote from the Heritage Foundation document from 2003? Reads that way.
Also, what exactly is "expensive"? An idea?
The references "This" and "it's" are vague, "expensive" is never defined, and the blockquote says that people under 55 "will enroll in a new Medicare Program with health coverage similar to what is now available to Members of Congress and Federal employees."
Hey, sounds good to me!
Or maybe I should read the legislative version instead of this post.
April 1, 2009 2:46 PM | Reply | Permalink
They are rushing to stay ahead of the crowd to set the mood for discussion. Clearly haven't read it yet, so have to cobble something together from old talking points.
"Abolition!!!" - a subtle invitation from Josh Coulter-Malkin, formerly known as a serious person, to have a "discussion".
April 1, 2009 3:28 PM | Reply | Permalink
Which means that you haven't read it either, but that doesn't stop you from a bit of "sleight of word" talking points trying to push the medical insurance welfare act.
April 1, 2009 3:50 PM | Reply | Permalink
Isn't that what Obama proposed during the campaign? Or is it just like his promise of no taxes of any form on
April 1, 2009 4:11 PM | Reply | Permalink
April 1, 2009 4:26 PM | Reply | Permalink
So they want to treat all of Medicare the same way they treated the drug plan? Line the pockets of the insurance companies who turn around and deny coverage for prescriptions except for generics. The same generics you can buy at most pharmacies for $4 or less. No generics available for the drug you need? Too bad, so sad.
With Part D (prescription coverage), every November the insurance company sends you out a list of drugs they will cover. You have to sign up for a company by Dec. 31 and you're stuck with that company no matter what they do. Starting around January 5, they starting sending lists of drugs that were covered but no longer will be. Every month, you get a new list of drugs that are no longer covered. And you're stuck - you can't switch to another company, you can't drop the insurance all together.
It's one of the worst scams I've ever seen.
Not to mention all the confusion when you're trying to choose between different plans every year.
And the confusion when your doctor asks "Does your insurance cover this drug? How about that one?" Well, doc, let me check this booklet they sent me in November, and all these lists they sent me the last couple of months and see if I can figure it out.
Gee, I can't wait till they do the same with all Medicare.
November: We'll cover this but we won't cover that.
January: Well, yes, we did say we covered that when you signed up for our plan but we won't cover it anymore.
February: Well, yes, we covered that last month but we dropped it.
March: You need a mammogram? But you had one last year. Oh, you have a lump? Have your doctor call us for an authorization. No, we won't pay the doctor for all the time she spends jumping through hoops and waiting on hold and filling out paperwork.
April: Biopsy? You don't need a biopsy but you can call the psychic hotline.
April 1, 2009 2:49 PM | Reply | Permalink
Great post!!
This is why we have to make sure that the Rethugs are marginalized in the health care debate and in any upcoming Medicare or Social Security debates. Screw Bipartisanship!
April 1, 2009 2:54 PM | Reply | Permalink
mmmmm, Little Debbie Cakes
April 1, 2009 3:17 PM | Reply | Permalink
Medicare is silly! You don't need health insurance! Only sick people need health insurance! And they're only sick because Jesus is spanking them for being bad! So they should just stop pallin' around with terrorists!
April 1, 2009 2:54 PM | Reply | Permalink
Here's another big thing: Republicans intend to freeze non-defense discretionary spending for the next five years. That means that if inflation is 3% per year, more than 15% of kids enrolled today will be kicked off Head Start during the next 5 years, the maximum Pell Grant award will remain where it is for the next five years, Meals-on-Wheels will cover more than 15% less of seniors' expenses in five years, etc.
April 1, 2009 3:01 PM | Reply | Permalink
As one of the ones who fell through the safety net, nothing the health insurance industry does is in the interest of it's customers. Nothing. By extension, the GOP is endorsing this position. The big lie is that the health market is a market. It's a loose-knit collaboration of parasites, much like the bank industry. Competition is a fantasy of the fevered minds at Cato and Club for Growth.
April 1, 2009 3:16 PM | Reply | Permalink
The big lie is that the health market is a market. It's a loose-knit collaboration of parasites, much like the bank industry.
Just want to second this sentiment. I've recently come to the conclusion that, while purely market-based approaches can be the most effective ways to meet many kinds of demands, any demands that are ultimately real needs--in other words, demands for things we need to survive, like health care services and food--too easily lend themselves to market abuses in the interest of higher profit.
It's only common sense, in a way, that the providers of goods and services that are literally necessary for survival have a disproportionate amount of leverage in the marketplace, when it comes to consumer choice, which can easily give rise to predatory and anti-competitive behaviors and business practices. In the case of the food industry, that's why we need a strong, well-funded FDA. And in the case of health care, that's why we eventually need a single payer, universal public system.
At the end of the day, whether it's now or later, everyone needs health care. There's no option not to buy health care when the eventual need arises.
In effect, that reality precludes the possibility of a truly free market for health care, preventing normal rules of supply and demand from operating effectively to seek an optimal ratio of cost to price.
That, in addition to the fact that our entire history and body of legal precedents affirm that protecting the life of its citizens is one of the most basic constitutional functions of our republic--a function it's impossible to truly fulfill without providing universal access to health care--cinches the case.
Whether it's federally funded and mandated but administered by the states, or federally funded and administered, there's no good argument for not establishing comprehensive, universal public health care, for the same reason there's no good argument for doing away with existing public safety services like fire rescue and police departments.
April 1, 2009 3:59 PM | Reply | Permalink
The real problem is that insurance companies DO NOT provide health care services. Doctors, nurses and hospitals do that. Let's think about what insurance really is.
At its root, insurance is a risk pool. We all know that some time or another we're probably going to get sick, and when that time comes, the cost will be more than we can afford to pay. If we're unlucky enough to get really sick, it will be more than we can ever pay. So we all pay into the system, knowing that our money is paying for treatment of others and trusting that if and when we get sick, it will pay our bills, too. Insurance companies are the brokers who handle the money, and they take a profit for their trouble, which is not, in and of itself, a problem. The problem is this:
Insurance companies, like any industry, compete with each other, and that's fine. The problem is that they can't attract customers (increase their profits) by providing better services like most businesses do because they don't provide those services - they just pay for them and their dollars don't buy any better services than any other company. The only way they have of increasing their profits is by competing with each other to see who can most effectively screen out people who might get sick or, failing that, finding a way to deny paying.
Health insurance companies are the only insurance companies who can do that. If your house burns down and you submit a claim to your homeowners insurance, they can't very well say it was a pre-existing condition. Car insurance companies can raise rates for risky drivers, but that's something you control. Health insurance is unique in the insurance world.
This is why a market-driven approach can't work. It's why virtually every industrialized country has moved to a single-payer system. It's why those systems deliver better results at lower costs, and no amount of Republican hand-waving can erase that fact.
April 1, 2009 5:18 PM | Reply | Permalink
They can also increase their profits by decreasing coverages and denying treatments.
Conflict of interest, if you ask me.
....
They will model future "Universal Healthcare" coverage on current Medicare Part D (Prescription Drug Plan)...
It will be a big payday for insurance companies.
April 1, 2009 5:32 PM | Reply | Permalink
The Republicans don't get that they are the minority. They don't get to make proposals like the programs they pushed during the past 8 years when they and Bush controlled Congress and the White House. That didn't work out so well for them, or the country. We don't want to do things that way any more. That's what the last 2 elections were about. Privatize Medicare. What a concept. They tried it with Social Security 4 years ago. Imagine if that plan had passed? Peasants with pitchforks and torches come to mind.
April 1, 2009 3:31 PM | Reply | Permalink
Couple of things. Medicare isn't free. There is a premium per month, plus a deductible and co-pays. If you go with the plans that eliminate these costs, you don't find any doctors. Also, the "quality" is very low. Getting doctors who will take even full price Medicare is difficult. In one specialty area that I have need, I have not found one doctor in the Austin, TX area who will take Medicare. Not one. Medicare maintains lists of providers and when you go down this list seeking care, they either have stopped taking Medicare (and have invariably told Medicare but have not been removed from the list) or they aren't "taking any new Medicare patients right now."
The Congressional Insurance, I'm sure, allows you to get treatment, Medicare does not. Medicare is a very inferior insurance product. I don't know what the answer is to the dilemna, but I am a liberal and I'm willing to listen to what the Republicans or anyone else has to say given the level of care available with Medicare.
April 2, 2009 9:39 AM | Reply | Permalink